US Shares Ease, Still Set to Close Near Record Highs

US stocks edged down on the final trading day of the year after testing record highs this week, matching the slight pullback for Treasury securities as investors took profits and assessed their certitude on whether the Federal Reserve will follow through with the extent of aggressive rate cuts that are currently priced for next year. The S&P 500 lost 0.5% and the Nasdaq 100 dropped 0.7%, while the Dow lost 100 points. Expectations that the Fed will start loosening monetary policy by March triggered a sharp rally for US equities at the start of November, after a series of economic gauges pointed to slowing inflation and a softening, albeit historically strong, labor market. The developments especially raised demand for stocks in rate-sensitive, AI-backed, tech companies, colloquially known as the “Magnificent 7”, with Nvidia soaring 230% on the year while Meta added 200%. The S&P 500 was due to add 24% on the year, while the Dow set up a 13% gain and the Nasdaq rose by nearly 55%.

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